Voices’ Blog

Cheers for improvements in child care subsidy

Posted:July 24th, 2018 - By:Emily Griffey

There were two major victories for children’s advocates in the budget deal Congress reached earlier this year; the creation of the Family First Prevention Services Act (view our webinar for an overview) and the significant increase in federal funds for child care through the Child Care Development Block Grant (CCDBG). This February Congress approved the largest ever single-year increase in child care funds, $2.4 billion per year, of which approximately $42 million will come to Virginia. The CCDBG funds can be used for financial assistance to help low-income working families afford child care, as well as system-level improvements to promote safety and quality.

The most significant impact of the additional child care funds is a reimbursement rate increase for licensed providers that went into effect on June 1, 2018. The Virginia Department of Social Services (VDSS) will now reimburse licensed child care providers up to the 70th percentile of the market rate. That means families receiving a child care subsidy should be able to afford the cost of 70% of the child care providers in their community. Since rates have not been increased since 2013 this action will have a significant impact on child care providers!

The market rate is based on a survey of costs in each Virginia locality and thus the increase varies from locality to locality, age of child, and type of care.

The rate increases are significant in Northern Virginia where child care is the most expensive for families. For example, in Northern Virginia:

A licensed family child care home caring for an infant in Fairfax will now receive $275 per week, an increase of $220 per month.

A licensed center serving a preschool age child in Alexandria would now receive $355 per week, an increase of $500 per month.

In the Richmond region, where child care is still expensive but costs are slightly lower, the subsidy rate increase translates to:

A licensed family child care home caring for an infant in Chesterfield would receive $175 per week, an increase of $100 per month.

A licensed child care center serving a preschool age child in Chesterfield would now receive $225 per week, an increase of $220 per month.

These increases are so significant that we hope they will enable low-income families to afford higher quality programs and to choose licensed, rather than unlicensed, providers. We also would like to see program administrators use the additional funds to increase salaries for early childhood educators, one of the lowest paid professions.

In addition to reimbursement rate increase, the additional federal dollars will be used to support system-level improvements to promote safety, improve eligibility, and promote quality. These items include:

The state has promised to cover the cost of the new fingerprint requirement for all regulated and licensed programs through 2019. Voices has advocated for these legislative changes to bring Virginia in compliance with new federal requirements.

Starting fall 2018, families will now be eligible for financial assistance for a continuous 12-month period, rather than redetermining eligibility at six months. And, families will have a gradual phase out of eligibility where as their income goes up, they will pay slightly more of the cost of care rather than face the “cliff effect” and lose all of their child care benefits.

VDSS has promised that additional funds will be used to further incentivize quality improvements by tying higher reimbursement rates to those demonstrating higher quality through the Virginia Quality rating system.

VDSS is required to give a report to the General Assembly by September 1, 2018 for its plans to use the additional federal dollars, an additional $23 million in FY19 and $42 million in FY20. While the increase is authorized for two years, it is now included in the base budget at the federal level and we anticipate it will continue to be funded.